The Week That Was - 18 March 2022

Welcome to The Week That Was, a round-up of key events in the construction sector over the last seven days.

Women in construction workforce

The construction workforce is said to be less than 15 per cent female. Construction News and New Civil Engineer have this year joined forces to advocate for the role of women in construction and engineering.

Following International Women's Day, there have been a number of pledges by businesses to invest in female construction roles, including Persimmon who have launched a target to appoint 50 female apprentices or technical trainees this year.

For further information, please click here.

Lumley v Foster

In this case, there was no written contract, but an oral contract was agreed at a meeting. The works carried out were allegedly substandard and, after some time, the Defendant downed tools with the works incomplete. Therefore, the Claimant issued proceedings for breach of contract.

This case was made more complex as the Claimant did not know definitively who the Defendant was and issued against a number of different parties.  To this question, the Court used the objective test stating 'the question is what a reasonable person, furnished with the relevant information, would conclude'.  The Judge concluded that the contract was entered into between the Claimant and Mr Foster personally (not a corporate entity).

In summary, Lumley v Foster highlights that parties need to be clear who the contracting entity is to avoid any personal liability for any future breach of the contract and, where possible, document the contractual relationship in an attempt to limit unnecessary disputes.

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Leeds Bradford new terminal plans cancelled

Leeds Bradford Airport has abandoned plans to build a new £150 million terminal, opting instead to expand its existing terminal.

AMP Capital, who owns the airport, had originally intended to replace the existing terminal with a new three-storey, 34,000 sqm terminal. This would sit on an alternative site within the airport's current boundary, but closer to a proposed rail link.  However, the airport has issued a statement confirming that 'excessive delays' due to COVID-19, together with the Government's decision to hold a public inquiry, has resulted in the airport instead deciding to develop the extension to the existing terminal, as originally approved by Leeds City Council in 2019.

The statement said 'with large investment in the scheme so far, airport bosses say that they are not prepared to commit a further uncapped sum over an indefinite timeframe into a public inquiry process when their focus needs to be on modernising the airport for the future'.

It is believed that further details of the scheme will be provided over the coming months.

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Request to extend subsidy for 'red diesel'

14 construction industry organisations have delivered a signed letter to the Chancellor, Rishi Sunak, asking that the construction industry be allowed to continue to use red diesel after 1 April 2022, for a further year.

Red diesel is a low tax fuel, that is used widely to operate construction machinery. As part of its plans to phase out subsidies to fossil fuels, however, the Chancellor confirmed in his 2020 budget that, from April 2022, red diesel will only be available to the agriculture and the rail sector. This will result in the construction industry having to pay the standard rate of tax on diesel.

Richard Beresford, chief executive of the National Federation of Builders, said: 'the development of electric plant machinery and alternative fuels was hit by Covid-19 lockdowns, so it was already tough to move from red diesel but a 190 percent increase on pre-pandemic fuel prices makes it unbearable for many businesses….Unlike the production of energy, the government has direct control over duties and can act immediately to save British businesses from this tax it is imposing on those who worked during lockdown and broadly did not use furlough. If it decides not to act, consumers must be ready for construction costs and house prices to rise, food to get more expensive, businesses to pass higher heating costs on to consumers and millions of jobs to be in the balance'.

It is expected that the spring budget will be delivered on 23 March 2022.

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Hydrogen fuel cell generator to be used to power construction site

Keltbray is working with provider AFC Energy to trial fuel cell deployment on a construction site in London.

Kiro Tamer, head of environmental sustainability at Keltbray, said: “This is an important step forward in our journey towards a net zero future".

Keltbray will lease from AFC Energy an initial zero emission hybrid fuel cell (HFC) generator that will act as a showcase for how the construction industry can decarbonise sites today.

For further information, please click here.

Recovery for Kier blunted by impact of inflation

Kier has reported that its construction division's operating profit has fallen from £30.7m to £12.8m over the past six months.  According to Chief Executive Andrew Davies, rising construction costs have meant that some clients are taking longer to sign off projects, and delays to projects have meant reduced turnover for the company.  However, it is not all bad news for Kier:  the company reported increased turnover and profit in its infrastructure division and increased pre-tax profit across its group.  Davies said that, whilst the "[t]he whole country is facing inflationary pressure", Kier's financial results are "normal" and the firm is "[…] doing what [it] promised to do."

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Thanks to Hannah McDonagh, Ellen Ryan and Faye Hopton-Cottrell for contributing to this week's edition.

Disclaimer: The information in this publication is for guidance purposes only and does not constitute legal advice.  We attempt to ensure that the content is current as at the date of publication, but we do not guarantee that it remains up to date.  You should seek legal or other professional advice before acting or relying on any of the content